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Nassim Nicholas Taleb is a bit of a tool, but I think his concept of "skin in the game" is a valuable one. The older I get, the more I discount people's opinions when they don't have skin in the game.
For example, here's a group whose opinions I don't respect: climate change experts. We could mitigate 90% of the negative effects of climate change in the next decade – but few experts are recommending action. Why? Because climate change experts don't suffer from climate change. If anything, their power and prestige grows when the climate gets warmer. Why else would they hype up any negative report and downplay any positive news. If somehow the climate stopped warming tomorrow, they'd be out of a job and looking rather foolish.
The beauty of capitalism is that it usually (though not always) aligns incentives in a positive way because the people making decisions have skin in the game.
I think that tackling climate change is hard because it is a massively collective action problem.
The payoff matrix of anyone likely to drown when the ocean level rises basically does not depend on how much CO2 she emits, only how much CO2 the rest of the world emits. Thus, even she does not have skin in the game in the sense that she will personally benefit from any choices she makes regarding limiting her CO2 emissions. She will drown or not depending on the actions the rest of the world take, but her own consumption choices only influence how much she has to pay for her car.
I think that for some topics, it is very hard to find a person who has something riding on the outcome which is proportional to what society has riding on the outcome. Climate change is one such topic. Geostrategic matters are another, perhaps. You have a bunch of military leaders who recommend this or that action, buy an aircraft carrier, invade Russia in the winter, get out of Afghanistan, whatever. Their pensions do not depend on how well their country does with their advice. In fact, their personal interests may lie diametrically opposed to that of their country sometimes: large scale conflict is generally bad for the general population and has bad outcomes for at least half of the countries who engage in it, but for general it can be their chance to shine. Of course, the incentive of a grunt who does not want to die in some ditch is also sometimes misaligned to the incentives of a country.
"Could" can mean a lot of different things.
For example, we could likely put a 100 people on Mars within a decade (if we made that the global focus of our economy to the detriment of every other goal).
Or NATO could invade and occupy Switzerland (i.e. it is technically possible but nobody has any incentive to do it).
Or we could build a Tesla with six instead of four wheels (if we pay Musk a few billions, he will likely design a prototype for us).
Or I could pass you the salt over the table (i.e. just ask and I will do it, no trouble for me).
Where on this spectrum do you think 'mitigate 90% of the negative effects of climate change' falls?
On the order of $100 billion we could do it. So somewhere between the Tesla and Switzerland options.
Is this sulphate aerosol geoengineering, or are you thinking about something else?
I'd also like to know the answer to that question.
IIRC the likely-better short-term alternative to sulfate aerosol is calcite aerosol (so the main side effect is to reduce rather than increase ozone depletion), and the likely-better long-term alternative is enhanced rock weathering (to actually get excess CO2 out of the atmosphere rather than just papering over a few of the problems it causes), but IIRC they're even further back in the theoretical/experimental stages.
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So we are talking about mitigation of effects, not getting rid of GHG, I guess?
I have not done the math, but I can see that kind of money building a lot of dams to counter rising see levels. I don't really see how it is enough to combat the expected heat waves, though. It will not buy half of Africa air conditioning for their homes.
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I’m pretty much the same. The opinions of professional activists, actors, writers, singers just get an instant dismissal from me. Nobody in that group has any real stake in the outcome. They aren’t going to feel the effects of failure or the benefits of success. An activist wants less policing but he doesn’t even live in that community. If crime goes up, it’s not his stuff getting stolen. And if businesses flee, it’s not them losing their job.
Even so called experts are hyper-expert in one tiny corner of a very large interconnected web. Yes, shutting down all the coal plants in the world would mitigate climate change. Of course, it’s not going to work because our entire economy requires electricity to function.
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Doesn’t the whole concept of externalized costs undermine this claim?
I’m don’t think it’s a specific failing of capitalism but the insulation of decision-makers in business from consequences seems alive and well to me.
Capitalism isn't utopian, and most capitalists are willing to let the state address its inadequacies. You acknowledge that this isn't solely a failure of capitalism, but isn't the externalization of costs even greater in bureaucracy or democracy as a whole?
I don't follow the question really as I don’t see bureaucracy or democracy as the same type of thing as capitalism.
All I’m saying is whatever its virtues I don’t see how capitalism somehow leads to more decision makers having skin in the game. Would you be willing to flesh out an argument?
Allow classic Milton to get you into the basics with only a sound bite.
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No of course not. The existence of exceptions doesn't negate the general rule. I thought about bringing up externalities but it felt long winded. So I just said (though not always) and hoped that would cover it.
Capitalism is the worst system except for all the other ones, yadda yadda.
What is your evidence of the general rule?
To make sure I understand, you’re saying “in general, capitalism leads to decisions made by people with skin in the game,” right? Would you be willing to flesh out an argument a little more? I just don’t see why that’s true.
At the risk of being basic, here's a simple example. Let's say I own a restaurant making chicken sandwiches. I have skin in the game. If I serve bad sandwiches at high prices, I will lose money and then go out of business.
On the other hand, consider the DMV. No one gets promoted or fired based on performance of the DMV. People are required to use their services, and they can't go out of business. No one has any skin in the game.
Chicken sandwich restaurants are generally good. DMV's are generally bad.
As a stupid counterpoint, we had a chicken chain try to move in recently. Super Chix. Good sandwiches at high prices. I think they lost out hard to the existing (and ever-expanding) force of Chik-fil-a.
This isn’t an argument against the general principle, but it is a reminder that there’s more than one way to lose money. Whether or not we eradicate a species has less to do with our stated preferences and more to do with its particular habits.
Super chix tried to advertise themselves as the woke version of chic-fil-a at higher prices. Needless to say, paying a premium to get gay chicken was not a recipe for success in the Dallas suburbs even if they did have slightly better fries.
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Wouldn’t the same be true of a worker’s coop? This seems more like an example of markets providing the right incentives than capitalism. Many group the two together; not trying to nitpick, it’s fine if you want to group them together, just want to make sure I’m clear.
It would be even more true of a workers' coop when considering the market for the provision of goods. The place workers' coops fails is, ironically, when considering the market for the provision of workers' compensation. Putting your investments in a single business instead of diversifying is in general a bad idea; making that business be the same business you rely on for a salary makes it an even worse idea. Maybe not for the customers, because from their perspective the workers' incentives are now just about as well-aligned as they possibly could be, but when considering the workers or even just considering both together it's hard to beat keeping most wealth in index funds rather than a "pray to God this one company doesn't go under" fund.
For sure. I get paid mostly in shares of stock and it blows my mind that my colleagues will keep theirs instead of selling and diversifying.
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Disagree that climate change experts are usually the ones to downplay positive news.
Often climate activists get mad at certain climate scientists for talking up the progress that’s been made or reasons for hope.
Some examples: Michael Mann (doom and gloomers really hate this guy), Zeke Hausfather (here’s an example of the measured tone he tends to take).
Petteri Taalas, the chair of World Meterological Organization in 2016-2023 and highly influential globally through IPCC and UN, was dunked on constantly by Finnish climate activists for statements like this.
“This translation service isn't available in your region”
That’s classic Petteri Taalas.
Sigh.
"WMO Secretary General Petteri Taalas soothes people's climate pain: "Only small changes to our everyday life" Fighting the climate crisis looks promising and hopeful from the eyes of an aeronautical scientist.
Secretary General of the World Meteorological Organization Petteri Taalas
The actions required to combat climate change are significantly easier than what has been done to combat the corona pandemic. And they don't have to be done immediately, but over time.
This is the message of the Secretary General of the World Meteorological Organization, WMO, Petteri Taalas, in his book , Climate change in the eyes of a meteorologist, published today .
WMO is an international organization in the field of meteorology under the UN. Taalas works in the organization's highest office. The core of the world's climate science, the intergovernmental panel on climate change IPCC, is also under his supervision .
So Taalas' words have weight. That's why he is listened to.
Taalas makes the fight against climate change sound easy and nice. And like you don't have to give up or suffer from anything.
That's what he wants it to sound like.
However, in Taalas' opinion, the image of combating climate change is in danger of slipping off the wrong track. According to him, the necessary actions, at least from the individual's point of view, will not revolutionize anyone's life in one way or the other.
So Taalas wants to restore dimensions to the climate debate. In his book, he repeatedly reminds us that understanding the proportions of things is important when choosing ways to solve a problem.
We sacrifice 75 percent of the Earth's arable land for growing livestock feed. It's a fool's errand and globally the biggest drawback of land use.
According to him, the means to combat climate change should be chosen carefully and thoughtfully.
According to Taalas, people should focus on big things if they want to play their part in climate action. Big things mean moving, living and spending.
Recently, the airspace has been dominated by diet changes, reducing the economic exploitation of forests and stopping air travel as the best ways to solve the climate problem. Someone is already talking about climate fanatics as standard-bearers of the true doctrine and guides in the lives of fellow human beings , he writes in his book.
Climate fanatics are taking climate talk on the wrong track Petteri Taalas has seen how climate change has turned from a phenomenon that worries a small group of researchers into mainstream news that shakes the whole world.
He has also seen how climate skeptics, who once strongly attacked science, have withdrawn from the debate. Now Taalas thinks it has gone to the other extreme.
This time, in Taalas' opinion, the desire to combat climate science has partly arisen as a result of "sharp and incriminating climate communication".
The desire to limit people's movement, diet, living or leisure time habits or the number of children under the guise of combating climate change has certainly put many people on the back foot , Taalas writes in his book.
On the other hand, Taalas does put the number of children on the agenda in an interview when talking about climate change. He would like population growth to be discussed in connection with climate change.
In Taalas opinion, diet is also an issue that needs to be considered.
Taalas also blames the sharpness of communication as the reason why the support of some parties has increased and others have decreased. In Finland, according to him, the Greens and the left-wing coalition have been at one extreme, and the basic Finns at the other.
So, according to Taalas, has a certain kind of politics done a disservice to climate protection?
The topic involves political sensitivities, because a significant part of the world's economic growth, jobs, transport and industry has been achieved by coal, oil and natural gas. Humanity's dependence on these was and is considerable , he writes.
For example, Taalas raises the yellow vest movement in France. The people took over the streets in protest of France's intentions to slightly increase diesel taxation .
According to Taalas, the majority of the world's population is of the opinion that climate change should be combated.
Things have to be considered from many points of view; in terms of climate, biodiversity, economy and employment.
According to Taalas, people are worried about how they will be able to move around at a reasonable price in the future, eat the reasonably priced food of their choice and vacation as they wish.
Presenting the fight against climate change as a penitential exercise requiring asceticism and self-flagellation falls into the lair of populists , Taalas writes in his book.
According to Taalas, sharp and blaming talk about climate change leads to polarization.
Just like the church, the fight against climate change also needs objective and moderate messengers, so that its image remains positive , writes Taalas.
According to Taalas, extremeness when talking about climate change can lead to the popularity of populists.
"The domestic climate debate has tones different from many other countries" In his book, Taalas accuses Finland's climate debate several times of being too fanatical and of moving at the level of imagination.
According to Taalas, it is important to value the importance of diet, the number of children, forests and air traffic with the numbers that describe them, and take into account the entire spectrum of reducing emissions.
Well, what are those numbers? You can look at it from many angles.
If you look at it from an atmospheric scientist's point of view, i.e. from the perspective of the amount of greenhouse gases ending up in the air worldwide, the numbers look like this.
Global greenhouse gas emissions. The biggest cause is energy 73.2%.
Taala is annoyed by the fact that, for example, the coverage of the IPCC's land and sea reports has given rise to the image that, in his opinion, the most central issue of climate change is agriculture and forestry or the seas.
According to him, the general public may have had a deficient picture of the fight against climate change as a whole, because the role of fossil fuel emissions has not been discussed in these contexts.
If you look at emissions from the perspective of a single person, they look like this.
The carbon footprint of the average Finn is 10,300 kg C02/person/year
According to Taalas' view, small climate measures are pointless tinkering. In his opinion, it doesn't matter from the point of view of the climate whether he chooses a paper or plastic bag in the store.
If climate change is not curbed, the earth will not be able to support the current number of people According to the most recent measurements, the global average temperature has broken the limit of 1.2 degrees of warming. According to the British Meteorological Institute, the magical 1.5 degrees may be reached at least momentarily already by 2024.
A return to the climate gap of pre-industrial times is no longer in sight.
Finland's Arctic region will warm by at least three to five degrees, even if the Paris Agreement is kept within the limits. In winter, the readings are even higher.
Sea level rise is happening slowly and will inevitably continue into the 21st century, even if we stay within the limits of the Paris Agreement.
The IPCC showed in 2018 that one and a half degrees would be the most ideal goal for the entire planet. Even two degrees would be happy in terms of the well-being of humanity. In conditions above three degrees, feeding the world's population would become very difficult.
Both policy makers and various companies and financial actors have heard this message and want to be part of solving this problem.
If emission restrictions are completely failed and all fossil resources are burned, the average temperature may rise by 3-5 degrees by the end of the century. Life on Earth continues even under those conditions, but the biosphere, i.e. the environment, experiences dramatic changes and is unable to support the current number of people.
Taalas wants to remind you that climate change is not leading to the destruction of humanity or the destruction of our planet.
Taalas even sees the situation as promising at the moment. By promise, Taalas means that so many countries in the world have made promises about climate action. China, the EU, Japan, South Korea, South Africa, with President Biden, the USA will also join the same front.
This is despite the fact that the Earth has already warmed 1.2 degrees on average and 1.5 degrees is knocking on the door.
According to Taalas, the message that climate scientists have been preaching for 40 years has now been heard.
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